SEC proposes sweeping changes to shareholder proposal and proxy solicitation rules

The Securities and Exchange Commission (SEC) released two proposing releases that would amend the federal proxy rules under the Securities Exchange Act of 1934 (Exchange Act). The first proposing release (Shareholder Proposal Release) would rescind Exchange Act Rule 14a-8 (Rule 14a-8) and amend Exchange Act Rule 14a-4(c) (Rule 14a-4(c)) to expand a company’s discretionary voting authority.¹ The second proposing release (Proxy Modernization Release) would revise several requirements under Regulation 14A to reflect changes in filing practices, technology and shareholder communications.²

Rule 14a-8 Would be Rescinded and Discretionary Voting Authority Would be Expanded

Currently, Rule 14a-8 requires a public company to include a qualifying shareholder proposal and supporting statement in its proxy materials, subject to the rule’s procedural requirements and substantive bases for exclusion. In the Shareholder Proposal Release, the Commission proposes to rescind Rule 14a-8 in its entirety, although other federal proxy rules would continue to apply to proxy solicitations subject to the Exchange Act. Therefore, if the SEC adopts the changes set forth in the Shareholder Proposal Release, state law, as opposed to Rule 18a-8, generally would determine the circumstances under which shareholder proposals are includable in a company’s proxy materials. The rescission of Rule 14a-8 would affect all companies subject to the Exchange Act, including operating companies, registered investment companies and business development companies. 

In light of the proposal to rescind Rule 14a-8, the SEC also proposed to amend Rule 14a-4. Currently, Rule 14a-4 allows a company to exercise discretionary voting authority on a proposal only if the matter is included on the company’s proxy card. As a result, under the current rule, a company may be unable to use its discretionary voting authority on a timely shareholder proposal submitted outside the Rule 14a-8 process. This happens if the shareholder sends its own proxy materials to a specified percentage of the company’s shareholders and meets certain other procedural requirements.

The SEC recognizes that rescinding Rule 14a-8 could increase the number of proposals on which companies lack discretionary voting authority. The proposed amendments would address this by allowing a company to use discretionary voting authority on proposals that are not on its proxy card. To do so, the company would need to include: (1) in the proxy statement, a brief statement of the proposal and how it intends to vote, (2) in the proxy card, a cross-reference to the proxy statement disclosure and (3) in the proxy card, a single check box that allows a shareholder to opt out of allowing the company discretionary voting authority with respect to any matter. 

Background

The Shareholder Proposal Release is a continuation of the SEC’s deregulatory actions regarding the proxy solicitation process. As discussed in a prior Legal Alert, on November 17, 2025, the Division of Corporation Finance (Corp. Fin.) announced that, for the 2025–2026 proxy season, Corp. Fin. would no longer respond to any no-action requests concerning Rule 14a-8 exclusions, except for those which concern proposals not proper under state law. On August 14, 2026, Corp. Fin. announced that it will no longer respond to any no-action requests concerning Rule 14a-8 exclusions, including requests concerning proposals under state law. These actions also are consistent with President Trump’s 2025 executive order, which directed the SEC Chairman to “consider revising or rescinding all rules, regulations, guidance, bulletins, and memoranda relating to shareholder proposals, including Rule 14a-8 (17 CFR 240.14a-8), that are inconsistent with the purpose of this order”³ (the purpose of the order being to protect American investors from foreign-owned and politically motivated proxy advisors). The SEC’s actions appear to have contributed to a decline in shareholder proposals over the past two years, particularly with respect to human capital, environmental and social shareholder proposals.⁴ However, there has also been an increase in lawsuits related to shareholder proposals.⁵

Company Considerations

As noted in the Shareholder Proposal Release, state law is “frequently undeveloped, ambiguous, or fact-specific with respect to shareholder proposals.” While some jurisdictions have acted to clarify their laws related to shareholder proposals,⁶ or are currently considering doing so,⁷ other states may not prioritize such changes. Therefore, companies concerned about potential shareholder proposals may consider assessing the legal landscape for shareholder proposals in their jurisdictions of incorporation. This may be particularly important for investment fund complexes, which may have investment vehicles that are organized in different jurisdictions. Companies may also consider reviewing their governance documents (i.e., charters and bylaws) to assess the adequacy of their advance notice provisions, voting thresholds, and ownership requirements for shareholder proposals. 

The modernization proposal would revise five proxy-solicitation requirements

In the Proxy Modernization Release, the Commission proposes to amend five proxy solicitation rules, and certain related forms, to account for evolving technological and industry practice. The amendments are briefly summarized as follows: 

• annual report to security holders. Rule 14a-3 would be amended to eliminate the requirement that an annual report be delivered along with the proxy materials if a company has filed its annual report on Form 10-K at the time that the proxy materials are delivered 
• twenty-business-day delivery period. Schedule 14A and Forms S-4 and F-4 would be amended to eliminate the requirement to send a proxy statement or prospectus at least 20 business days before the shareholder meeting when information is incorporated by reference
• Notices of Exempt Solicitation. Rule 14a-6(g) would be rescinded, ending both mandatory and voluntary filings of Notices of Exempt Solicitation on EDGAR
• broker search period. Rule 14a-13 would be amended to shorten the period for initiating the broker and other intermediary search from 20 business days before the record date to five business days before the record date. 
• filing contact information. The cover pages of Schedules 14A and 14C would be revised to require contact information for a representative who can respond to questions about the filing.

Comment period

Comments on each proposal are due by November 20, 2026.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 See Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4, 91 F.R. 59904 (proposed Sept. 21, 2026).}

_{2 See Proxy Solicitation Modernization, 91 F.R. 59852 (proposed Sept. 21, 2026).}

_{3 Executive Order, Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors (Dec. 11, 2025).}

_{4 See The Conference Board, 2026 Proxy Season: Human Capital, Environmental, and Social Proposals Decline by Over 30%, PR Newswire (Aug. 11, 2026).}

_{5 See, e.g., New York City Employees' Retirement System v. AT&T Inc.}

_{6 For example, in 2025, Texas enacted Section 21.373 of the Texas Business Organizations Code. That section allows certain Texas corporations to adopt bylaw or charter provisions restricting shareholder proposals to shareholders meeting certain ownership thresholds, holding periods and other conditions.}

_{7 The Council of the Corporation Law Section of the Delaware State Bar Association released a statement noting that it will review the impact of the proposed repeal of Rule 14a-8 when reviewing Delaware corporate statutes. See Statement of the Council of the Corporation Law Section of the Delaware State Bar Association (Sept. 18, 2026).}